Amazon May Have To Take Kindle Off Market

Amazon.com may have to close the books on their Kindle. And they're not alone.

On Jan. 28, CopyTele, Inc. (CTI) filed a lawsuit in the Federal District Court for the Northern District of California against AU Optronics Corp. and E Ink Holdings, the Taiwan-based companies responsible for such integral products as (respectively): flat panel displays for televisions, computers, and tablets (including Apple's iPad) and electrophoretic displays such as those utilized by e-reader products like the Kindle and Barnes & Noble's Nook.

According to CopyTele's website, they "develop and acquire patented technologies for the purposes of patent monetization and patent assertion. The company currently has patent portfolios in the areas of Managed Key Encryption, E-Paper® Electrophoretic Displays, Nano Field Emission Displays, and Micro Electro Mechanical Systems Displays."

In addition to a patent infringement lawsuit against E Ink, CTI is alleging: breach of contract, fraud, conspiracy to monopolize, unfair business practices, antitrust, and other anti-competitive acts, according to their press release. They are now seeking punitive damages against AU Optronics (AUO) and E Ink.

The claims made by CTI are all the more salient in light of recent developments involving CTI's legal representation -- San Francisco based Lieff Cabraser Heimann & Bernstein - which recently worked with the U.S. Justice Department to root out "antitrust and unfair competition actions" on the part of AUO.

Convictions in that previous case led to fines being owed by AUO to the tune of $500 million, in addition to civil settlements of $199.5 million. Several top AUO officials also received Federal prison sentences.

If CTI and their representation are similarly successful with the new suit(s) against AUO and E Ink, the two manufacturers may have to cease production of the displays whose patents the former is alleging E Ink stole (through a modicum of alleged conspiracy with AUO).

These displays, along with other parts made by AUO and E Ink (the only manufacturer of the screens in particular), are inherently necessary for aforementioned e-readers such as the Kindle and Nook.

Thus, if E Ink and AUO are in trouble, so is Amazon and Barnes & Noble. At least until the latter can find other manufacturers.

As AUO also works with Apple in the production of its iPads, the resonance of the CTI claim may span wide enough to cast multiple big name companies in a fiscal net from which they will have significant trouble escaping in the near future.

The claims are especially daunting for Amazon, though, as - with their earnings having slipped 45 percent last quarter - it's said the best thing they have going right now is their Kindle (which reputedly shipped an estimated five million units during the same last quarter).